On October 12, 2012, the Georgia Bankers Association (the “GBA”) delivered a public comment letter on the proposed Basel III capital rules and the related proposed risk-weighting rules. A copy of the letter is available for viewing here.  In the comment letter, the GBA identifies over a dozen categories of key flaws in the proposed rules and concludes that the proposals should be withdrawn for further study or, at the very least, should be modified to exempt community and regional banks from their requirements.

The GBA takes the position in the comment letter that the regulatory agencies have a duty to apply the principles that they espouse for stress testing and enterprise risk management to their own rulemaking process. The GBA argues that the proposals are likely to introduce complementary risks to financial institutions, especially community banks, the impacts of which are not yet fully understood. As a result, the GBA asserts that the regulatory agencies should take time to study the impact of each rule change on the industry and then “stress” those impacts together and under a wide variety of market circumstances as a part of their role in managing risks to the banking industry.

The comment letter provides a wealth of themes and talking points as financial institutions make their final efforts to deliver their own comment letters, which are due no later than October 22, 2012. We encourage all financial institutions to identify any issues in the proposed rules that may significantly impact them and to submit a comment letter regarding those issues.

The GBA developed a task force to study the impact of the proposed rules on banks in Georgia and to develop thoughts for the comment letter. That task force included a number of bankers and service providers, including Bryan Cave’s Jonathan Hightower.